Business leaders have called the attention of the national government to the “hidden cost” of doing business down to the community level.
Cezar Consing, Ayala Corp.’s CEO, said these costs affect businesses that have low margins, which could make certain communities less attractive to investors.
“What we find here is there are a lot of unwritten [and] hidden costs to doing business. More recently, I see them more at the local level. And if you’re a firm that is trying to do business nationwide, it’s those costs that that are so hard to quantify,” Consing said during a panel of the Pilipinas Conference 2023, a forum facilitated by think tank Stratbase.
“I think that is a real issue because in many of these businesses, margins are very thin. And you need leverage on top of that. The room for error is actually not that wide. If you’re guessing your costs, and you don’t know what they are, and they surprise you, I think it’s a real detriment to investment,” he added.
Christian Gonzalez, International Container Terminal Service Inc. (ICTSI) executive vice president and global corporate head, said “regulatory friction” compounds the difficuties faced by businesses in managing their costs.
He used the example of Metro Manila’s traffic experience in 2014 when then Mayor Jospeh Estrada prohibited container trucks from traversing Manila during daytime.
“So you’re talking of billions of dollars of investment from the public and the private, over time, in an industry that’s so critical it effectively becomesthe economic heartbeat of the country.
And one guy, you know, with a mandate from over 5,000 people can shut the place down. So we need government at the highest levels, to look at the weakest point in the chain that we’re all involved in. Understand what is creating the weakness in those particular links, and use political will to solve it,” Gonzalez said.
Nina Aguas, Insular Life executive chairman, meanwhile said the government should push more for accountability and transparency.
“In terms of regulations, for example, I want things to be simpler. The tax regime alone, it’s just too complicated. And having experience of how it was working in Singapore, for example, or like, our business is opening in Singapore, you talk about the hidden cost of setting up, it takes only two or three hours to be able to start a business. So it’s not days, not 30 days,” she said.
“In Singapore, when you file your individual tax return, you’re audited before you start to pay. And then you’re given a year to pay for the whole thing. So that there’s no corruption, it’s all like technology driven. So that makes it a lot easier. It’s very transparent. The process is very simple. So I’d really like that for the Philippines,” she added.